Nvidia reported April results that were essentially in-line with the Street. Shares of NVDA traded up ~2% in the aftermarket given the company reported an in-line quarter and effectively guided in-line with the Street for the first time in a year.

Takeaways:

• We remain long-term positive on the story given Nvidia is still positioned to capitalize on providing hardware to enable the undeniable themes of AI, autonomy, and gaming.
• We continue to believe there’s a risk to the company’s full-year guidance.
• The company continues to work through inventory challenges based on the demand headwind from crypto declines. Concurrently, the company is undergoing a product transition to its Turing architecture in the gaming segment.
• While the July guidance was in line with the Street, it was below management guidance issued in February. For July, the company now expects revenue to be down 18% y/y, compared to previous implied guidance of down 10%.
• The revenue trend appears to be moving in the right direction (down 31% y/y in April and guidance calls for July down 18% y/y). The company expects to return to modest growth in October.
• Nvidia seemed optimistic that cloud gaming would improve it’s gaming segment, not hurt it. The company’s GeForce Now cloud gaming platform, still in beta, has 300K MAUs and an additional 1M players on the waitlist.
• In addition to operating its own gaming platform, Nvidia is supplying Microsoft, Google, and Amazon datacenters with GPUs that are likely to be used in their respective cloud gaming platforms. Near-term, cloud gaming platforms will likely increase the addressable PC gaming market and are not expected to have a significant negative impact on the demand for high-end gaming graphics cards.

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